Income Tax Appellate Tribunal - Ahmedabad
Ramesh Industries, Panchmahal vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "A" BENCH AHMADABAD
Before Shri Mukul Kr. Shrawat, Judicial Member and
Shri T.R. Meena, Accountant Member
ITA No. 209/Ahd/2013
Assessm ent Year :1992-93
M/s. Ramesh Industries, V/s. ITO W ard-2 Godhara.
1936, GIDC, Halol.
District-Panchmahal
PAN No. AADFM8998M
(Appellant) .. (Respondent)
अपीलाथȸ कȧ ओर से Shri S.J. Acharya, A.R.
By Appellant
ू×यथȸ कȧ ओर से/By Respondent Shri Rahul Kumar, Sr. D.R.
सुनवाई कȧ तारȣख/Date of Hearing
20.03.2013
घोषणा कȧ तारȣख/Date of Pronouncement 24.05.2013
ORDER
PER : T.R.Meena, Accountant Member
This is an appeal at the behest of the assessee which has emanated from the order of CIT(A)-IV, Baroda, dated 04.12.2012 for A.Y. 1992-93.
2. The sole ground of appeal of the assessee is against confirming the penalty by the learned CIT(A)-IV, Baroda under Section 271(1)(C) of the I.T. Act at the value of Rs.1,67,932/-. The learned A.O. observed in penalty order that the assessee's return income at Rs.10,55,800/- there were addition under the head 'G.P.' at Rs.1,43,751/- and unexplained cash credit at Rs.8,33,000/-.
I T A No . 2 09 / Ah d /1 2 A . Y . 199 2- 9 3 Page 2 The learned AO imposed penalty at Rs.1,67,932/-, i.e., 100 per cent tax sought to be evaded on addition of Rs.8,33,000/-.
3. The assessee carried the matter before the CIT(A) who confirmed the penalty by observing that before the CIT(A) in quantum appeal filed confirmation of depositors identical and statement of A.O. were contradictory. Before the AO affidavit furnished by the appellant were found tailored and some of the depositors were not produced before the AO for verification. The Assesse's source of income is also not found satisfactory by the CIT(A), therefore genuineness of the transaction and the creditworthiness of the depositors were not established by the assessee in quantum appeal. He further observed that Section 68 is deeming provision which applies when the assessee's explanation about a cash credit found in his books is rejected. It is necessary for the assessee to prove, prima facie, the transaction which resulted in a cash creditor in his books of account. The appellant had not shifted his onus on the revenue by producing the evidence at the time of quantum appeal. He mainly established the identity of the creditors which is not true to the genuineness of the loans. Even mere filing of confirmatory letters also does not discharge the onus that lies on the assessee. Mere furnishing of the particulars is also not enough. Even mere payment by the account payee cheque is also not sacrosanct nor can it make a non genuine transaction genuine. He relied upon various cases narrated at page 14 of his order and held that Section 68 of the Act would be made a basis for imposition I T A No . 2 09 / Ah d /1 2 A . Y . 199 2- 9 3 Page 3 of penalty. He further relied in the case of Jashbhai F Patel Vs. CIT(1982) 136 ITR 799 (Punjab) wherein false entries in the books of account regarding loan creditors were found, penalty was upheld. Further as per the decision of Hon'ble Allahabad High Court in the case of Jaswant Singh Rajinder Singh Vs. CIT (1980) Taxation 57(1)-11 (All.) it is held that where cash credits have been treated as undisclosed income penalty is leviable and was also upheld. Therefore, he concluded that the appellant had furnished inaccurate particulars of income.
4. Now the Assessed is before us. Learned counsel for the appellant contended that the Commissioner of Income Tax (Appeal) erred in confirming the penalty order of Assessing Officer on the addition of Rs.8,33,000/- under Section 68 of the I.T. Act without appreciating the fact that Hon'ble ITAT Ahmedabad had reduced the amount of addition to Rs.4,48,000/-, i,e, given relief of Rs.38,5000/- in their quantum appeal vide ITA No.3090/Ahd/2007 dated 03.11.2009. By mere confirming the addition under Section 68, penalty under Section 271(1)(c) would not follow as natural corollary. The AO had not established conscious part of the concealment of the assessee. There is a distinction between unsatisfactory explanation and false explanation. The false explanation attracts the penalty while addition made on the basis of unsatisfactory explanation may not attract penalty. The appellant filed confirmation notorized affidavit of 7-12 of Farmers, Gram Panchayat Certificates and produced the cash creditors before the AO who has I T A No . 2 09 / Ah d /1 2 A . Y . 199 2- 9 3 Page 4 confirmed the loan advanced by them to the appellant. It is further argued that the learned ITO had not given clear finding as to whether assessee was guilty of concealment of income or furnishing inaccurate particulars of income by relying upon the judgment of Hon'ble Gujarat High Court in the case of New Sarothia Engineering Co. Vs. CIT (2006) 282 ITR 642 (Guj.). He relied in the case of Ramchandran Rao Vs. ITO-33 ITC 650 (Hyd.), S.L. Ganeriwal Vs. ITO-48 ITD 11 (Jp.), Sashi Raj Kapoor Vs. ITO-38 ITD 249 of Hon'ble Bombay High Court and CIT and another Vs. Anwar Ali (1970) 76 ITR 696 (SC) of Hon'ble Supreme Court. The A.R. further submitted that in the present case mere fact is that the learned AO has not been satisfied with the submission and record produced before him but it would not constitute that assessee had consciously concealed his income by furnishing inaccurate particulars of income and relied upon in the case of CIT Vs. Jalaram Oil Mill (2002) 153 ITR 192 (Guj.). In the case of CIT Vs. National Textile 2001 249 ITR 145 (Guj.). Hon'ble High Court of Gujarat held that in order to justify levy of penalty for addition of cash credits, there must be some material or circumstances leading to reasonable conclusion that the amount does represent assessee's income and the circumstance must show that there was conscious concealment or act of furnishing of inaccurate particulars of income; Explanation-1 does not make the assessment order conclusive evidence that the amount assessed was in fact the income of the assessee. If an assessee gives an explanation which is unproved but not disproved i.e., it is not accepted but circumstances do not lead to the reasonable and positive I T A No . 2 09 / Ah d /1 2 A . Y . 199 2- 9 3 Page 5 inference that the assessee's case is false, the Explanation cannot help the Department because there will be no material to show that the amount in question was the income of the assessee. He requested to delete the penalty. At the outset learned D.R. relied upon on the order of CIT(A) and prayed to uphold the order of CIT(A).
5. We have heard the rival contentions and perused the material available on record. Learned A.O. made addition under Section 68 of the Act at Rs.8,33,000/- which was reduced by Rs.3,85,000/- in quantum appeal. The appellant had filed confirmation, affidavits 7-12 of Farmers and Gram Panchayat Certificates some of the cash creditors were also produced before the AO for examination. Even then, the A.O was not satisfied on evidence filed by the appellant in quantum appeal, therefore, he made the addition under Section 68 of the Act as creditworthiness of the cash creditors have not been found proved by the appellant, therefore, coordinate bank had confirmed the addition under Section 68 of the IT Act but as held by the jurisdiction of High Court in various cases particularly in case of National Textile (supra) that these evidences made it sufficient for addition under section 68 of the I.T. Act but are not sufficient for imposing penalty under Section 271(1)(c) of the IT Act. Learned AO has to bring some material which leads to reasonable conclusion that the amount in form of cash credits represents the assessee's income there must be conscious concealment on the part of the appellant or act of furnishing of inaccurate particulars of income. Therefore, we have I T A No . 2 09 / Ah d /1 2 A . Y . 199 2- 9 3 Page 6 considered view in these facts and circumstances of the case, the penalty imposed by the AO, confirmed by the CIT(A) is not justified. Accordingly, we reverse the order of the CIT(A).
6. In the result, the assessee's appeal is allowed.
This Order pronounced in open Court on 24.05.2013
Sd/- Sd/-
(Mukul Kr. Shrawat) (T.R. Meena)
Judicial Member Accountant Member
TRUE COPY
Prabhat
आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-
1. अपीलाथȸ / Appellant
2. ू×यथȸ / Respondent
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ- अपील / CIT (A)
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद ।